Correlation Between Auto Trader and Abrdn European
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Abrdn European at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Auto Trader and Abrdn European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and abrdn European Logistics, you can compare the effects of market volatilities on Auto Trader and Abrdn European and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Auto Trader with a short position of Abrdn European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Abrdn European.
Diversification Opportunities for Auto Trader and Abrdn European
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auto and Abrdn is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and abrdn European Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn European Logistics and Auto Trader is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Auto Trader Group are associated (or correlated) with Abrdn European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn European Logistics has no effect on the direction of Auto Trader i.e., Auto Trader and Abrdn European go up and down completely randomly.
Pair Corralation between Auto Trader and Abrdn European
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.85 times more return on investment than Abrdn European. However, Auto Trader Group is 1.18 times less risky than Abrdn European. It trades about 0.07 of its potential returns per unit of risk. abrdn European Logistics is currently generating about -0.01 per unit of risk. If you would invest 54,080 in Auto Trader Group on September 3, 2024 and sell it today you would earn a total of 29,260 from holding Auto Trader Group or generate 54.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. abrdn European Logistics
Performance |
| Timeline |
| Auto Trader Group |
| abrdn European Logistics |
Auto Trader and Abrdn European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Abrdn European
The main advantage of trading using opposite Auto Trader and Abrdn European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Abrdn European can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Abrdn European will offset losses from the drop in Abrdn European's long position.| Auto Trader vs. Applied Materials | Auto Trader vs. Evolution Gaming Group | Auto Trader vs. Air Products Chemicals | Auto Trader vs. Omega Healthcare Investors |
| Abrdn European vs. McEwen Mining | Abrdn European vs. CNH Industrial NV | Abrdn European vs. JB Hunt Transport | Abrdn European vs. Catalyst Media Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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